Name of the Project
Ncondezi coal-to-power project.

Location
The 38 700 ha Ncondezi licence area is located in Mozambique's coal-bearing Tete province, one of the largest undeveloped coal mining regions in the world.

Project Owner/s
Ncondezi Energy.

Project Description
Ncondezi's Joint Ore Reserves Committee-compliant coal resource amounts to 4.7-billion tons, permitting a large and long operation. The Phase 1 power plant will use Mozambique’s present transmission network, reinforced, to carry its output to users. Only about 20% of the country is currently electrified, and the acceleration and expansion of electrification have become government policy.

The Ncondezi mine forms part of the integrated thermal coal mine and power plant project. The power station is expected to initially produce 300 MW, of which 60 MW will be used to operate the power plant, and 240 MW will be supplied to the northern electricity grid for use by consumers across Tete.

Being built in phases, the power plant project has been designed to be scalable up to a planned maximum capacity of 1 800 MW.

The Ncondezi mine will be the base for the project, and the power plant will be located on the mining concession. The mine will be able to supply 1.1-million tons of coal a year, with an energy-producing capacity of 18.66 MJ/kg for 25 years.

The openpit mine will be 2 km away from the power plant and will have a lifetime capacity of 4.8-billion tons of coal. The coal from the mine – still at a lower quality than export-grade thermal coal – will have to be processed to achieve the desired grade of 18.66 MJ/kg before it can be used by the Ncondezi power plant.

Ncondezi Energy will consider exporting coal when the price of seaborne coal and access to rail and port infrastructure improve in the future.

Some of the other lower-quality coal from the surrounding mines in Tete might also be used to bolster the power station’s coal supply.

Potential Job Creation
During the construction of the Ncondezi power plant and mine, an estimated 2 000 jobs will be created. Once construction of the mine is completed, it will provide 50 permanent jobs while the power plant will provide more than 200 permanent positions.

Net Present Value/Internal Rate of Return
Not stated.

Capital Expenditure
The estimated cost of the power plant is $1-billion and that of the mine between $60-million and $80-million.

Planned Start /End Date
Ncondezi aims to deliver the first power from the project in 2023.

Latest Developments
Ncondezi Energy is at an advanced stage of finalising the shareholder loan restructuring, which is expected to provide additional time to explore future refinancing options, CEO Hanno Pengilly has said.

Management is concentrating on further derisking the 300 MW Ncondezi power project over the next three to six months.

The proposed restructuring will provide the team with sufficient time to do that, Pengilly has noted.

Ncondezi has received "in principle" support from all loan holders to enter the loan restructuring proposal, which entails a 12-month extension on existing terms, including a 12% annual interest rate and the option for lenders to swap debt for equity in part or in full at a conversion price of 10p apiece.

Ncondezi also has the right to pay off the original principal amount of the loan, as well as to convert the loan payment into Ncondezi shares at a 25% to 30% premium to the 30-day volume-weighted average price.

Documentation for the restructuring is being finalised for submission to lenders and is expected to be completed before the end of December.

All lenders have indicated that they will not call in the loan while the restructuring is being finalised. The loan is currently set to mature on November 30 and is valued at $4.3-million, including $2.1-million principal and $2.2-million rolled-up interest.

Fifty per cent of the loan is held by the company's largest shareholder and a further 45% by Ncondezi’s board and management.

The restructuring is subject to the lenders’ agreeing to the documentation and the necessary related party transaction process being completed by the company's independent directors.

Key Contracts and Suppliers
KPMG (mine feasibility study), Impacto and Environmental Resources Management Southern Africa (environmental- and social-impact assessment) and the Mineral Corporation (geological consultant).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
NPC, tel +44 20 7183 5402 or email info@ncondezicoal.com.